All bankruptcy attorneys are not created equal. Schedule A Free Case Evaluation
Nowack & Olson, PLLC
Let’s do this together.
Speak with one of our professionals.
888-813-4737

What is Chapter 11 bankruptcy?

Bankruptcy is a legal declaration to help clear the burden when a small business or individual is overwhelmed with debt. It initiates a process where creditors often agree to new, and lesser, payments in effort to recoup some of the money they are owned.

There are different types of bankruptcy within US code, but Chapter 11 is one of the most prominent types declared by businesses because instead of selling assets to keep the ship afloat, it calls for a pause and a re-launch instead.

The primary purpose of Chapter 11 bankruptcy is to allow a company to restructure itself and introduce solvency while meeting creditor obligation. Sometimes internal leadership positions will change during a filing, but there is no requirement that a business install new personnel. It must, however, formulate a new business plan that reduces the debt to revenue ratio while making good on promises to its creditors.

How does Chapter 11 work?

In a nutshell, Chapter 11 bankruptcy is declared because of problematic debt. While other bankruptcy chapters can call for liquidation of a company or its assets, Chapter 11 has a restructuring focus to keep the income flowing throughout the process. Leadership normally remains in place for daily operations. Meanwhile, major decisions transition to the court, such as lease and property renewals or sales, expansion or reduction of operations and the (re)negotiation of contracts and agreements.

In a broad overview, the business continues operations while being internally reconfigured. If the company can't come up with a plan that creditors like, creditors can either suggest their own restructuring or they can move the bankruptcy to Chapter 7 (liquidation).

Creditors generally seek a repayment comparable to what they would get through a Chapter 7 case. If the declaring business can meet that basic goal, creditors tend to accept Chapter 11.

How to file

Before filing, a company must undergo credit counseling and must have waited at least 6 months since any previous bankruptcy filing. There are notable administrative fees that near $2,000 in total. The filing then kicks off an automatic stay, meaning creditors can't make new demands until the case is heard.

Once the new structure and payment plan goes into action, if a debtor again fails to make payment, the case can be renewed or moved to Chapter 7, which will likely mean the closing of the business.

Each business will have unique needs, demands and obligations. Through filing a Chapter 11 bankruptcy, the intent is to restructure operations while remaining open.

No Comments

Leave a comment
Comment Information

We take your situation as seriously as you do.

Start with a Free Case Evaluation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

What Our Clients Say:

Back
  • "Maria please let Attorney Olson know how pleased I am with the results of my home loan modification with Bank of America. I am so grateful for all of their hard work, especially since my house was a gift from my parents, I prayed not to lose it to foreclosure....."

    Cassandra M.
  • "We received last Friday our bankruptcy discharged letter for the trustee.
    We want to thank you very much for your services in our bankruptcy file.
    We are very pleased and happy with your service, you are so professional, courteous, organized and fast.

    We will recommend you every time we can.
    God Bless You!"

    Yazmin & Ricardo D.
  • "MY EXPERIENCE WITH MITCH AND CHRIS AND U WERE JUST A GREAT EXPERIENCE I WANTED TO GIVE UP PRIOR TO U GUYS.. DON'T WANT TO FORGET ABOUT LEO, HE'S ALSO GREAT PERSON..COMMUNICATE REALLY GREAT WITH ME,,ACTUALLY ALL OF U ....I CAN EMAIL OR CALL .U ALL ALWAYS REPLY TO ME....."

    Tonya C.
  • "I was very pleased with work of Nowack & Olson, and way you guide me through all process of bankruptcy and loan modification. I received good care and was informed on every step of it. Thank You very much. You save my life!"

    Kasia D.
  • "Just wanted to thank you again for helping my wife and family through a tough time. We are finally starting to get back on our feet and building back our nest egg. We have stabilized our income again, and see the light at the end of the tunnel. I remember one of your tag lines was helping good people through bad times... That always rang true with us....."

    Peter R.
  • "After a rather distasteful experience with a Foreclosure Attorney I was apprehensive to say the least to hire an Attorney to handle our Bankruptcy. After some internet searches and research I found Christian Olsen, and after our initial consultation my wife and I retained his services....."

    Bobby and Tanya
  • "I am a teacher who reaped the rewards of a profitable side business until shortly after the recession. I struggled to keep my business afloat until I finally threw in the towel. Between personal and business debt, I was suffocating in bills....."

    Richard C.
Read More Testimonials

Privacy Policy | Business Development Solutions by FindLaw, a Thomson Reuters business.